Bitwage’s Jonathan Chester on the 4 Reasons Why People are Switching to Bitcoin Payroll

Bitwage’s Jonathan Chester on the 4 Reasons Why People are Switching to Bitcoin Payroll

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Although Bitcoin has now been operating out in the wild for nearly seven years, the vast majority of the general public still see it as nothing more than a financial toy for nerds. Many possible use cases of the technology have been touted by venture capitalists and entrepreneurs, but the peer-to-peer digital cash system is still finding it difficult to provide use cases that matter to the average person.

During day two of Blockchain Agenda San Diego, Bitwage President and Founder Jonathan Chester discussed at least two applications of the Bitcoin network that are gaining traction: payroll and international payments. During his talk, Chester provided four reasons as to why their users have decided to move to their Bitcoin-powered service.

Bitcoin is a Vote Against the Banks

The first use case of Bitwage mentioned by Chester is related to what is perhaps the oldest reason people began to migrate to the blockchain in the early days: It’s a vote against the banks. Bitcoin allows individuals who have a disdain for the current banking system to vote with their feet and try a new option. Chester explained:

“It’s a vote against the banks. In a democratic, capitalist society, the way we change things is through voting, but voting against the banks is not necessarily available on the ballot. So, a lot of people believe because of how much money and lobbying the banks have, that when you’re voting for a candidate, they most likely have already built relationships with banks. Instead of doing that, people decide to vote with their capital; they move their money out of the banking system.”

Although there are some who would simply like to see Bitcoin incentivize the banking industry to improve themselves and finally enter the digital age with some real purpose, there are also plenty of individuals who would like to see everyone take control of their own digital assets and entirely replace the need for banks.

Bitcoin Could Go ‘To the Moon’

Another reason people want to get into bitcoin — and therefore have interest in Bitwage — is they want to speculate on the future value of the digital commodity. Chester noted that we’re still very much in the early days of this new technology, and the price of a single bitcoin still has plenty of room to grow over the next few decades:

“Bitcoin is still a nascent technology. It’s not even technically considered out of beta. If you look at the market cap, it’s around six to six-and-a-half billion dollars right now. And that’s small if you look at it from a [wider] perspective. If you look at the gold market, which is a global reserve, [it has] a 6.3 trillion dollar market cap. So, if bitcoin were to ever be considered a global reserve currency for perhaps countries that have very volatile currencies — like Venezuela, like Zimbabwe, like Vietnam, like Argentina — and bitcoin takes just 1 percent of gold’s market share there, it’s going to grow 10x.”

The Bitwage president also mentioned the forex market as another area of disruption for bitcoin as an asset. The future value of this new digital token is impossible to predict. Some see the price of a single bitcoin going over $1 million, while others believe the entire system is destined for failure. The point is that bitcoin allows users to speculate on the success of Satoshi Nakamoto’s novel invention.

The Unbanked Still Need to Get Paid

One demographic that is seemingly always brought up in conversations about Bitcoin is the unbanked. While people with bank accounts can simply receive their paychecks via direct deposit, the unbanked have to deal with physical checks and the various costs of turning them into cash. Jonathan Chester discussed some of the issues the unbanked face when it comes to getting paid for their work:

“There are a lot of unbanked people out there, and most of them receive their wages in checks, which means they have to go to the check cashing industry, which means they’re losing up to 5 percent of their wages every time. That doesn’t even include the cost of turning the cash back into a check to pay their bills. In addition to this, many of these unbanked employees are either immigrants or migrants, and they’re paying money back home to their families, which means they’re dealing with lots of remittance costs.”

Although Bitcoin solves many of the problems the unbanked face with digital payments, there are also problems with making the switch to the blockchain. Price volatility and the lack of merchants accepting Bitcoin were mentioned as two issues holding back adoption of the peer-to-peer digital cash system by the unbanked.

International Payroll is the Biggest Reason to Use Bitwage

According to Jonathan Chester, the fourth reason people are moving to Bitcoin-powered payroll options is also the most powerful. There is a large amount of friction involved with international payments between certain countries, and Bitcoin has the ability to dramatically reduce these costs for the average person. Chester mentioned that the capital controls, government-mandated exchange rates, and other economic restrictions found in some countries can cause serious issues for individuals who are simply trying to earn a living. In one example, Chester explained that someone in Argentina could lose 40 percent of their real wages if their employer is in another country.

Although the reasons for switching to Bitcoin are clear for someone in Argentina, their employer may not see the benefits of integrating Bitwage into their payroll system in another country. Chester explained that his company has a solution for this problem:

“Instead of having to pay 40 percent, [someone in Argentina] gets to pay 1 to 2 percent [to receive his wages], and he gets to do it from the comfort of his own couch. The issue that he had is his clients don’t want to deal with Bitcoin, don’t want to figure out what this is, don’t want to touch it, or don’t want to sign up for it, so he ends up finding Bitwage and starts using our solution — our individual solution so [employers] don’t have to sign up.”

Jonathan Chester added that roughly half of their users are taking advantage of the Bitwage platform for international payments, and this demographic also makes up a large percentage of the overall volume because international users tend to receive their entire wages in bitcoin.

The advantages of using Bitcoin for international payments are obvious to those who usually have to deal with legacy payment systems. Chester mentioned that international payments take roughly five days to arrive when traditional options are used, and the costs associated with non-Bitcoin solutions also average around 8 percent of the entire amount sent. On top of that, Chester also added that there is no guarantee that the funds will arrive in some situations. He explained, “Funds get lost all the time.”

There are many aspects of Bitcoin that get overhyped, but international payments is one application where the advantages of the decentralized payment system are clear to anyone. To gain adoption among the general public, Bitcoin needs more of these kinds of use cases where the peer-to-peer payment system is simply the best option.

Kyle Torpey is a freelance journalist who has been following Bitcoin since 2011. His work has been featured on VICE Motherboard, Business Insider, RT’s Keiser Report, and many other media outlets. You can follow @kyletorpey on Twitter.

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